There are many ways of looking at the visit by the United States National Security Advisor Thomas Donilon to Beijing this week (July 23-25), first of its kind by the White House official in the past 8 years or so. One way was that Donilon was deputed by President Barack Obama as a “fire extinguisher”, since secretary of state Hillary Clinton has been “running around to contain China” as a latter day John Foster Dulles — as a People’s Daily commentary noted.

Thomas Donilon

The commentary reminded Washington about the 1962 Cuban missile crisis and pondered why China too shouldn’t “receive due respect… for its interests and concerns in the Asia-Pacific region.” It warned that the US is challenging China’s “bottom line in issues concerning its core interests such as the Diaoyu islands dispute [with Japan] and South China Sea, which is counterproductive and dangerous.”

“[The] intentional burial of the Yalta system may destroy the legal foundation of the existing power system in East Asia, and in turn many unresolved historical problems into new disputes, which will damage the interests of China, Russia and also the United States itself.”

Besides, the US is harboring ambitions “beyond its capacity, and may suffer another major setback” similar to the Korean War and Vietnam War. As curtain-raiser to the visit of a key Obama envoy, the commentary (here) stood out.

But then, China-US partnership is a many-splendoured thing. Despite the acrimony over the US’ pivot to Asia, China is sill the biggest holder of US debts, even pushing the gross holding to 1.17 trillion dollars by increasing $25.6 billion through two straight months — May and June.

China admits it shouldn’t be putting all eggs in one basket, and yet it seems to be doing just that. China’s gold reserves account for only 1.6% of its foreign exchange reserves. Of course, Chinese officials insist that the preference for US dollar is purely on economic grounds — due to the currency’s safety, liquidity and profitability. But then, economics can never quite be altogether divested of politics — or vice versa.

Again, the Chinese economy is responding to the government’s stimulus measures and there is good possibility that the slowdown in economic activity will soon bottom out. Whereas, European economies are struggling (including Germany) and seem set for prolonged slump. Which, in turn, makes Chinese market hugely important for the US exports.

Indeed, even as Donilon arrived in Beijing came the stunning news from Canada on Monday regarding the takeover by China National Offshore Oil Corporation of the Calgary-based Nexen for a price of $15.1 billion. Simply put, Canada’s oil sand reserves, which, ironically, the Big Oil from the US worked hard to develop through the past half century, are now within China’s reach alongside that country’s high technology. Canada’s oil sands reserves are the third-largest recoverable crude deposits in the world.

According to Bloomberg data, China has spent $53.4 billion on Canadian oil and gas fields and companies, in comparison with $30.8 billion by US companies. Beijing is all set to make Calgary one of Cnooc’s international headquarters and the operations hub for overseeing its assets in North and Central America. The politicians on the Hill are livid that the US is missing the plot.

The future Sansha City* on Yongxing Island as envisioned by Chinese authorities

Curiously, Beijing announced on the same day the establishment of the Sansha city. President Hu Jintao underlined at the meeting with Donilon on Tuesday that Washington and Beijing should “respect and take care of each other’s major interests and concerns and handle sensitive issues in a stable, careful and proper manner,” and as agreed mutually in previous Sino-American summits, the two countries should explore “the way of developing a new type of relationship” that is cooperative while based on mutual respect and mutual benefit. Donilon responded, “We [US] think our relationship is defined by practical cooperation.”

One of Donilon’s objectives was to work out “practical cooperation” on Syria. The Chinese media hinted that Syria would figure at the talks. However, the day after Donilon left, government-owned China Daily carried a blistering attack on the US’ plans of a “Libyan model intervention” in Syria. The China Daily commentary underscored that the scope for US-China “practical cooperation” over Syria is virtually nil, as things stand.

* Sansha is a prefecture-level city in the province of Hainan established by the government of the People's Republic of China on 24 July 2012, which nominally administers all of the Spratly and Paracel islands in the South China Sea, the Macclesfield Bank undersea atoll and surrounding waters, which are disputed with Vietnam, the Philippines and Republic of China, among other parties.
The centre of government for Sansha City is located on Yongxing (Woody) Island in the Paracels, on which some 1,000 Chinese civilians currently live. Woody Island is the largest of the islands in the Paracel and Spratly groups. The flat island has an area of about five square miles, is equipped with infrastructure, including a post office, a bank, a supermarket and a hospital but depends on regular supplies from mainland China. Nationally, it is the smallest prefecture-level city by both population and land area, the largest by water area with a claimed 2 million square kilometres (~772,000 square miles), and the southernmost. (wikipedia)